Stocks end higher for a second day as Fed minutes point to smaller rate increases in the future

In a volatile day, U.S. equities ended higher on Wednesday as meeting minutes from the Federal Reserve revealed that the institution is planning to raise rates gradually in the coming months as inflation slows.

To reach 34,194.06 the Dow Jones Industrial Average increased by 95.96 points or 0.28%. The Nasdaq Composite rose 0.99% to 11,285.32, while the S&P 500 jumped 0.59% to end at 4,027.26.

After the department store company reiterated its projection, Nordstrom's stock slumped by 4.24%. However, based on consensus predictions on Refinitiv, Nordstrom exceeded profit and sales projections in its most recent reports. After Citi upgraded shares from sell to neutral, Tesla saw a 7.82% increase. On better-than-expected profits, Deere rose 5.03%.

The Fed is making headway in its fight against rising inflation, according to the minutes from its November meeting, and is trying to decrease the pace of rate increases by making smaller ones through the end of this year and into 2023.

According to the minutes, "a significant majority of participants assessed that a decrease in the pace of rise would likely be appropriate shortly." One reason why such an evaluation was crucial was the "uncertain delays and magnitudes associated with the impact of monetary policy operations on economic activity and inflation."

Rates reached their highest levels since 2008 earlier in November as the central bank approved a fourth straight 0.75 percentage point increase. The majority of economists anticipate a December rise of 0.5 percentage points.

According to Art Hogan, chief market analyst at B. Riley Financial, "what it really demonstrates is you've got a market that's anxious about one thing and one thing only, and that's the Federal Reserve and what their opinions are on monetary policy." Markets, which are also seeing light trading activity owing to the holiday-shortened week, are paying close attention to any news that might change the narrative surrounding rate rises moving ahead.

Data on jobless claims for the week ending Nov. 19 were higher than expected, coming in at 240,000 while analysts surveyed by Dow Jones had predicted 225,000. The outcome suggests that the labor market could be deteriorating. But at the same time, orders for durable goods in October came in at 1%, which was higher than the 0.5% forecast.

Due to the Thanksgiving holiday, markets will be closed on Thursday and shut down early on Friday.

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